Ub Group Against Global Majors Demand For Cut In Import Duty

While foreign players in the domestic liquor industry have demanded a reduction in the import duty on liquor, the biggest domestic player, the Vijay Mallya-promoted UB group, has opposed the demand. According to the foreign liquor companies, the imported spirits are taxed higher than domestic alcoholic beverages.

Vijay K Rekhi, president of the UB group's spirits division, said the current duty structure was in conformity with international norms.

"The domestic industry is not against the opening up of the premium scotch whisky or other high-end alcoholic beverages segments. The core issue is to ensure that cheap imports are not dumped in the Indian market," Rekhi said.

On the government's policy of allowing import of bulk concentrate, Rekhi said it would encourage value addition.

However, he said most of the multinational liquor companies were yet to set up their own manufacturing units in a big way in the country.

Industry sources said the basic customs duty on spirits is only 210 per cent. The duty structure on imports ranges from 464 per cent to 704 per cent only when additional duty and special duties are added to it. The basic customs duty on beer and wine is below the bound rate (150 per cent) at 100 per cent.

A number of foreign companies have expressed reservations on the decision of the state governments to impose levies on imported liquor and also on the complexity of labeling norms.

As per the seventh schedule of the Constitution, the states can levy excise duties only on liquor which is manufactured in the state. However, the same schedule also stipulates that a special fee could be imposed on alcohol which is manufactured or sold in the state.

"The domestic industry follows as many different labelling laws as the number of states and union territories and there cannot be two different sets of norms for domestic and imported foreign liquors," Rekhi said.

The Centre has agreed to reduce tariff rates to 150 per cent by 2004 as per its World Trade Organisation (WTO) commitment and, until then, additional duties are tools which would ensure a non-discriminatory treatment between imports and domestic spirits.